Cost of Living
Definition
The amount of money needed to cover basic expenses (housing, food, transportation, healthcare, taxes) in a specific location. It varies dramatically between cities — $60,000 in rural Texas provides a very different lifestyle than $60,000 in San Francisco.
Why It Matters
Cost of living should factor into every major financial decision — job offers, relocations, retirement planning, and salary negotiations. A $20,000 raise means nothing if you move somewhere that costs $25,000 more annually.
Example
A $100,000 salary in Austin, TX has roughly the same purchasing power as $180,000 in San Francisco. Housing is the biggest driver — a median home in SF costs ~$1.3M vs. ~$450K in Austin. Always compare salaries adjusted for cost of living.